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tv   The Call  CNBC  April 8, 2010 11:00am-11:59am EDT

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asked you what chuck prince should do with his exit bonus. that is the 10.6 million in cash. 60% of you said he should give it all back and 14 said he should return and 22% of you said he should keep it all. >> we know he kept it when it came to the stock that he got. >> did we have a rule in the voting where wall street ceos couldn't vote more than once? monsanto downgraded from buy to hold. keycorp, take some profits the stock is down substantially. credit suisse and increasing its target to 46 and you can see that stock is also up maybe on some news. ebay downgraded to hold from buy and stocks down about 1.6% and emc downgraded from hold to buy which has a price target of $19.50 on the stock, which is up
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just slightly higher than where it is. principal financial downgraded and the firm citing valuation. i have my own way of these calls. neutral is do nothing and the conviction buy and conviction sell thing at goldman is humorous. >> wall street research. okay. thanks so much for watching "squawk on the street" mr. faber will be back with me tomorrow. >> i will n deed. "the call is next. welcome to "the call." i'm trish regan and we're 90 seconds into today's session. can greece get its financial house in order? we will debate it. hey, larry. >> thank, trish. did china blink? we'll discuss who will benefit and if there could be an economic backlash for the usa. >> i'm melissa francis, the
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controversy for carry-on luggage today. today southwest weighs in and game on. this is "the call" on cnbc. all right forget about dow 11 noun stocks are falling as investors worry about the deepening financial crisis in greece. on the plus side, retail sales were strong in march helped by an early easter and right now take a look at the s&p 500. it is essentially fought on the session and down three points. that's 0.3%. take a look at the dow, as well. negative territory by about 25 points, 0.2% and 10,873. we're getting further and further away from that mark. verizon the biggest drag there. take a look at the nasdaq. trading on the downside by 8.5% and that's a third of a percentage point. oil falling for the second straight day as inventories remain at a ten-month high.
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still above 85 bucks, though. 8514 and down 74 cents and almost a full percentage point. trish, what's happening on the floor? >> hey, melissa. a lot of people out there might be wondering why this market isn't performing better given those stellar retail sales. jane wells will be with us and break it all down for you. what to a certain extent was baked in. there is some optimism regarding the consumer and people anticipated that this news would be good and retailers trading flat and a little bit to the positive and not seeing a huge push there. what is weighing on this market right now is greece, greece, greece, greece and whether it could get its financial house in order. i want to bring pisani in who is on the phone. >> sorry, talking to a trader. >> busy, busy, busy. let's talk about the greece situation and we were just saying a few days ago people had written it off and they weren't that worried and you look at a market down today despite the
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strong retail news. >> when you get an inversion of the greek yield curve that solicits a lot of attention and that doesn't happen very often. trying to talk greece, once again, off the ledge. this is the problem with these sovereign default issues and sovereign default concerns. historically, they don't follow in a smooth line and they don't get resolve and they get very, very bumpy and we're in a bumpy period. nonetheless, i think he has done a good job trying to reassure people that it is very unlikely -- >> what is that meant for the european mark isn't. >> look for national bank of greece. that's looking better and way off the lows. still down about 4% and germany is also off of its lows and started very weak and gotten better as the comments came out. there's national bank coming off its lows, as well. >> let's talk about citi and mr. reuben's failure to sell. little history lesson here. >> talking about citigroup and they're going to be a culpat.
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it didn't elicit a lot of trader comments. until mr. prince made a comment that he hadn't sold any stock at all ever and he kept holding on to it and that got traders going. there's the one-year chart of citigroup. half the traders were saying, look, that's the right thing to do and showed real leadership and the other half said, you got to be kidding me. not good asset management in general. >> by the way, i want to go back to this retail before we go to jane. your thoughts? >> the important thing here is outperformference the year. the smart money has been long retail for the whole year. retail stocks up 12, 14, 15, 18% the s&p is only up 6% and they stayed long and smart money right on retail and i think you'll see some people unloading in the next couple minutes. >> bob pisani, thank you so much. some of the strength that we've seen in the consumer, we want to go to jane wells. >> hey, trish, march came in like a lion. thompson reuters reporting
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record same-store sales across 28 companies and that's 30% better than expected and retail metrics calling it a blowout with 8.7% growth. its highest growth figure in a decade. now, the best sector department stores with over 12% growth and apparel just shy of 12 and discount chains at 10.1. easy comps and cato stores, it was the biggest winner, 24% sales growth. that is six times better than estimates. raised quarterly guidance earnings and kohl's had a ten-point beat. it, too, raised guidance six cent but you could see shares were down and aeropostale which was not doing well reported record sales in march and nordstrom coming in at almost 17%, but the stock has been down
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maybe because it did not raise guidance and ross more than double expectations. did anyone miss, yeah, a couple. long suffering abercrombie & fitch had 8% growth and the street was expecting 6.6. and jcpenney just barely missed with, even though it raised, speak, jane. even though it raised guidance, it's still down. you can see, of course, the biggest retail in the world does not give mun monthly sales, walmart. we may have to wait until mid-may and look into costco had a nice beat, but it's down. maybe some weakness in electronics. we'll be back on "power lunch." back to you. >> hot story consunler spending picking up across the board. the retail index at a 52-week high. had a tremendous move. so, have the strong gains already been priced in? let's ask jerome marts, director of consumer research at thompson
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reuters and jan niffen. if i got all that right. jerome, let me start with you. has all the good news been price under to the stock market? because this news is better, better, better than people thought. >> it's definitely better. the important thing to note is that the department stores came on top with 12.3% same-store sales followed by the apparel at 11.8%. what is this telling us? the consumers are responding very well to the new spring merchandise and just so you know, march and april are two months that are categorized by introduction of new spring merchandise that is sold at full price. this is telling us that the consumers definitely willing to spend to pay full price again and that is a trend we haven't seen in two years and that's why it's such great news. >> jan, what i thought awas significant about this is it looked like the strong shopping went just beyond the discounters. the likes of walmart where people were trying to go cheap. am i correct in saying that?
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>> absolutely. it was pretty amazing. even if you believe as i do that easter was worth about 6 percentage points on the shift and if you believe the weather was 250 basis points, so call that 8.5 in total between the two of those. department stores still up 13%. the rest of that is just a much stronger consumer and it didn't really matter that nordstrom was having a great number or if you're in the middle with macy's and kohl's having great number or down at tj max and ross having great numbers and it was pretty much across the board and give on the great weather and the easter shift, and all of that. if you cancel all that out, it was still a pretty darn good month. >> march didn't rob from april because easter was in april. >> it will take 7.7% store sales out of april. macy's gave guidance a zero. if they hit that zero they'll have one darn good quarter.
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march, april combined is still going to be a really good number. >> jerome, address for us the naysaying argument that the unemployment rate is too high and the discount of consumer spending is simply not sustainable and we're all going to go in a handbag and fall off a clip and live happily ever after. what do you say to those criticisms? >> what we were seeing before is that the consumers that were employed were holding back on spending, instead of spending, they were saving all that money. now, what we're seeing is the opposite. the consumers that are still employed are actually splurging and digging into that discretionary income and spending and that's why we saw strong march same-store sales and we saw a little spike in consumer confidence. >> the job's numbers are getting better slowly. we've seen some household, i said this a million times. the household small business jobs numbers are small. what do you like here? what are your picks? what are your favorites? >> my favorite picks are t.j.
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maxx, aeroposteal and kohl's. they were formed during the economic slow down because they delivered the message of value and they built consumer loyalty which results in strong same-store sales. >> what about the run these stocks already had. i'm looking at abercrombie trading at 2010 earnings. jan, give me one that hasn't already had a significant run or where it isn't priced and you think there's more room? >> i like collective brands. payless shoe source and they're about a $40,000 household income company. they really haven't seen the run yet, but they're doing a great job. they have product and keds is in gap now and spery is in j. crew and now fashionable and will get business from that lower-end consumer when she comes back. if gas prices doesn't kill us -- >> that's a good point.
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stay with that for one second. if gas prices don't kill us, what is your risk assessment there? >> if we see $3.50 gas, my love of collective brands payless shoe source may be somewhat less. >> we'll leave it there. thanks to both of you. speaking of retail power lunch has a rare interview with j. crew ceo millard drexler and we get his take on the economy and consumer spending. fears about greece are rattling investors. what a debt default would actually mean for the markets. up next, united and u.s. usairways in talks.
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down in washington there's a congressionally appointed panel to look at the financial crisis, that is, of course, robert rubin, former citi banker, former treasury secretary. he is speaking now. before that former citi ceo charles prince apologized to this panel. mr. reuben so far has not apologized to the panel. the company was wrong, they failed to better prepare for the financial kriss and their risk-taking apparatus fell apart.
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at the same time, mr. prince defended his bank's size and conglomerate nature. citicorp is having a better year and trading flat to slightly higher today. i find it very interesting that mr. reuben continues to be the uncontrite product in this. maybe there's a story there. we will wait and see. trish, over to you. let's talk about the airlines, larry. a deal that could create the second largest carrier in the united states. talks between united airline airways and usairways both trading up there. you can see usairways up better than 12% and ual up better than 8%. phil lebeau joins us whether there may be a spoiler in the deal. >> how are you? we've been down this road before and the question comes down to whether or not this merger will fly. we know about the positives out there but why are united and
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usair interested in hooking up. it comes down to a couple of things. he said it in early february, this industry has to consolidate and shortly after that talk started between the two airlines and the gold here, more corporate customer revenue. that's really where dealt saw cleaning the clock for delta and usair. they want to catch up in that area. they may have overlap problems in washington and chicago and might have to shed some gates, but for usairways ceo doug parker this is a great opportunity because he will be able to expand his airline and never mind it's smaller than united, he took a smaller america list and built it into usairways and usairways is the fifth largest airline in the country. united wants the size that would come along with a merger to better compete with delta particularly for those corporate customers and the hub overlap in washington, chicago, that's a potential conflict that ultimately could shed some gates
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there to make this work in the eyes of washington. what about continental? you'll hear people talk about the idea that united and co continental were in talks. they are watching this and they'll see what happens here and they already went down the path of mother-in-lawer with united once and decided it wasn't going to work and that said, you're going to hear a lot of industry analysts say look for united try to bring continental into the game. >> i suspect united has been banging on continental's door repeatedly over the last six months and i think, clearly, they're trying to let continental know you might be left out if you don't come to the party. so, i think this could be more of a stalking horse than anything else. >> as it always happens whenever there is merger talk in the airlines you see investors push these shares higher and it's hard to tell with usairways there, it looks like it was trending lower but up 24% at the opening of the trading session and today up 12% and united up
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and even continental. the company has not come out and said anything regarding this potential merger because there is that speculation there, trish. even continental shares are moving higher. this is not something we'll see completed overnight. if it does happen, we're talking about weeks down the road. they still have a number of issues they need to clear up. >> we want to talk more about this and consolidation coming and what does it mean for the industry? let's bring in hunter kay airline analyst. hunter, first, i'll ask you and phil just alluded to this in terms of it being weeks in the making here, how much of a problem are the unions potentially going to be here because we saw that as an issue with pilot's union can continental and ual and usair tried to do this once before. >> well, yeah, obviously the airline industry has a track record and largely that is due to labor unions and specifically something called seniority list. every pilot has a rank, one
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through 3,000 pilots through a particular airline and that gives a lot of things including pay and job security. so, when two airlines merge with distinct seniority lists you have to integrate them. someone that is old oer and someone who has been flying a certain aircraft longer. with this particular merger you have three because the former usairways pilots have two one from miracle west and usairways and that can get pretty complicated. >> phil, building on that, building on that theme, i mean you have a washington that is much more sympathetic to labor unions right now. this has to pass a regulatory hurdle. will that be a problem? >> i think there is always that potential, melissa, that you could see some regulatory issues brought up. but most people i talked with that are either familiar with the discussions or involved in the discussions they have said that is not as much of a concern as whether or not they could get the unions to sign off on this. that's the biggest hurdle that is going to be presented is
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whether or not you can get labor to go along with this. >> hunter, assuming you get labor to go along and assuming there are not road blocks in washington, what does it mean for me the next time i travel on one of these airlines? will i get a better deal or a worse deal? >> you should expect higher pricing and there is overlap here. and this is an aggressive play here. united could have gone with continental off the bat or far more less domestic and the overlap issues, you've got some redundancies with the philadelphia and dallas hubs and in the southwest reejen with san francisco and phoenix. so, that could potentially result in investments. that's the two areas we're watching the dulles/philadelphia and the phoenix, san francisco hubs. that is where pricing will be affected the most. >> companies having a hard time
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making money and how much better are they collapsing into each other's arms? >> if you put these two companies together they will have a network that is stronger in terms of competing with delta and in terms of winning over a chunk of that corporate customer revenue and that is really the primary revenue you want. i know we always talk when you and i go flying the leisure revenue is not where you make the big bucks, but the corporate customers. >> what about southwest. they are a good example of an airline that is profitable based on those leisure travelers. >> also a different business model than you have with united and usair. you're talking about different business models there. the corporate customers, that's where the real money is at and that's what they're seeking here. >> all right, thank you so much, guys. it's a tough business model, especially these days. larry, over to you. up next, greece's borrowing costs are hitting new highs. will the year's on member get direct assistance from the e.u. and the imf after all?
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that is the big debate. what about those french and german banks that own the greek paper, melissa. what are they going to do? >> i don't know. we told you about spirit airlines $45 carry-on fee and the ceo coming up we'll talk with the top executive from the only major airline that isn't charging you a cent to store your bags. competing business models here, who will win?
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welcome back, everyone. talking about retail all morning. three companies here at 52-week highs and all reported retail sales this morning and all came in strong and the gap trading up almost 3% bed, bath & beyond and target up almost 3%. good news there on the retail side. hey, melissa. >> this situation in greece is getting worse, the spread between greek and german bonds is widening to record levels and the euro is falling close to 2009 low against the dollar. take a look at that, 133.45 dollar. essentially flat on the session right now. here to assess the situation and what could be done is michael husen, market analyst for cmc markets and andy burner. thanks to both of you for joining us. michael, let me strart with you.
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we heard about this so much we almost became immunized on this crisis. on a scale of one to ten, one being our financial crisis that we had here, how serious is this? >> it is very cirrusious. what has been happening over the past two or three months help for greece. mixed messages coming out of france and germany. france are more in favor of a bailout because of their banking exposure to greek debt and germany had exposure but not to the same level as france and also under the lisbon treaty and prevented from actually bailing out member countries. deit does prevent them with a bit of a cunonedrum. basically, showing us the money. >> andy, let me go to you. michael used the word provariicating. beautiful word meaning they lie and the deals, in washington they call it cogging inative
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dissidence i will say it is speaking with forked tongue. we don't know what the deal is and i want to ask you, will we go back to square one and require for greece direct cash assistance from france or germany or the e.u. or the imf or somebody? if not, than the contangent comes. is it the next step in thislarre done is they have to come through with the loans they promised to greece. right now no one is believing they have to be there. germany believes with what germany has put together. today we have for the first time that we've seen the greek yield curve go inverted. two their years got almost up to 8% before stabilizing on the comments and ten-years got up to probably 7.5. this is just crazy what's going on right now. but, what he clearly said today
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and i believe that this will ultimately be the case, they will stand behind greece because -- >> who's they? who's they? he has his own agenda. who is they? >> larry, i believe the who's they is the european union themselves. i believe that they actually will be there. i don't believe greece is going to default. what you had one of the accelerations one of the last few days and repo desks throughout the world are refusing to take greek death and you had an acceleration and this has snowballed and that's why you have these kind of rates. >> always a way to make money on uncertainty. i see a situation like this and i wonder how john paulson is making money on it. what do you think? what is the best trade here? >> i think probably long of gold and short of euros because gold, gold against the euro is all-time highs and continuing to get higher. i wouldn't want to be along the
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euros against any particular currency. even falling against sterling and that's a basket case in itself. so, you know, basically, as far as the euro zone is concerned, there is a distinct lack on loss of credibility. >> andy, can i ask, i'll ask another cliched question because melissa says what goes around keeps coming around for the recent months. the contagion effect. ireland looks better. ireland has made tough budget cuts but the southern european tier, i don't hear much going on there, italy, portugal, spain, plus greece. that would deep on the bank debt problem. >> there's no question contagion is a real problem but portugal announces they will reopen two issues. we have to wait and see how that goes. this really has been confined this week, in particular, to greece. greece and nothing but greece. you've had yields now, as i said, you know, you can buy yields, two-year greek yields
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7.5 times what two-year points are yielding. emerging market clients, i know this is greece, what they wanted, but emerging market clients have to take a look at this. once they get a feel the situation is stabilized. >> you bet greece does not default. michael, what do you bet? >> i think at some point the imf will have to come in. i don't think that germany will count a bailout because it could be challenged in the german courts under constitutional law. >> and you're going to look at the collapse of the euro. >> i was going to say, collapse of the euro. michael, what about collapse of the pound? you mentioned that as a throw away. we have this snapple action developing. neither party, so far as i can tell, the labor rights really have much of a fiscal program, michael. give me a quickie on the pound, sterling. >> at the moment they're getting the benefit of the doubt until
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after the election. depending on the result of that election and any austerity plans that you'd like to call it, that will then determine the future, the direction of the pound. but, the oecd basically came out and said this week that their begrowth forecast for the uk the top for european countries. if we can get good growth maybe the spending cuts could be paid back a lilt bit. >> interesting forecast, guys. >> well done. thanks to both of you. when we come back, more on the international currency story. revamping its currency policy and who stands to benefit the most from that change if, in fact, there is a change. >> these currencies are really getting interesting. we'll talk about this carry-on fee outrage as more airlines start charging for luggage. we'll sit down with an executive of one carrier who has refused to go along with the rest, making some people very happy. we'll talk about it when we come back. 
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welcome back, everyone. treasury secretary tim geithner making an unexpected stop. steve liesman reporting they may be very close to a deal here, although it could be a long time coming. steve, what is the latest on this? is this a deal that could really be monumental? >> i think it could be a siggant announcement, but secretary tim geithner completing that
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unscheduled meeting and, as expected, there was no announcement made on any currency deal with china to allow it to revalue. here's what the treasury department sent us and when we asked for a little more detail, which was not a whole lot more. secretary geithner and wang qishan continued discussions they have had on global and bilateral economic and financial issues. they had a good meeting and we expect these discussions to continue in the coming weeks as we move toward the strategic and economic dialogue in may and the g20 meetings in june. but an official told cnbc yesterday that china would allow the currency to appreciate and such a move is expected within days, but, trish, does not have to wait that long. it shows little change because, essentially t is controlled. down just a little bit or up against the dollar. but currency traders say the forward markets in the currency are traded with an expectation that china would allow a roughly 3% upward revaluation of the
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currency. that would bring the juan to the 660 level. the question is whatever china announces, will it be enough to stave over growing anger that is known to manipulate. >> stick around. we'll have more on this. did china blink and who will benefit more from an expected deal and could the deal backfire here in the usa? joining us, chief political strategist and cnbc contributor. greg, i think that the obama people and geithner in particular have played this delicate menu rather well heading off the protectionists on the one side and keeping you on revaluation of some kind alive. what is your political take on this? >> it's a really good story for the markets. we've avoided a trade war. we all know they manipulate. but we can't really force a fight right now because we need
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them on iranian sanctions and we need them to buy our debt. i think it was a pretty detroit compromise. >> let me just ask this point because i heard a lot of opposition. when you say i know they manipulate the peg has been there now for 15, 18 months and before then the peg was in place for many years and then they controlled it on the upside, so it was up 20%. in other words, is china, they don't make many changes in their currency. i wouldn't call that manipulation. in a sense, i worry that we are the manipulators. >> are you going to say -- >> i think king remninbi. the dollar is rising against most currencies around the world, not against the taiwan dollar and so forth. i don't know what to make of this. >> i think the politics, all of a sudden, are that the obama administration have gotten a dose of pragimatism.
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we're going to drill for oil and that will upset the environme environmentalists. i think this is a really good example in china of how they're turning a little less ideological. >> let's talk about this issue on whether or not we really need them to buy our debt. what happens tomorrow if they say, okay, we had enough. aren't they hurting themselves, too, steve. >> i think that's right and getting to larry's answer what happened here. did china blink? i think both of them realize that there was a lot to lose on both sides of the coin here, which is that, you know, china sells a lot of its goods to the united states and it may want to go around the world and find another country to whom it feels comfortable lending the kind of money that essentially china lends us. >> who would that be? think about it. >> there's nobody there. there's nobody in africa. what's really interesting here. a really important development is that the euro has shown itself to have deep flaws when it comes to playing the role of a reserve currency.
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>> you're right. >> that has brought china back and say, look, they're in an important market for us. we need it to buy our debt but they need to buy our debt. >> in other words, we're not completely beholden to them. greg, were you going to add something? >> we are going to hear a lot of squawking from chuck schumer and many of the democrats, but i don't think they're going to go to the wall on this. they'll complain about it, but i think everybody knows we have to look the other way and risk a big trade war right now. >> i think you know that. >> i think politically it's expedient. isn't it politically expedient to make this a big issue. big, bad china. >> it's a lefty union issue, is what it really is. craig, what happens on the flip side of this. what if geithner comes back empty handed and weeks go by. the timeline here, okay, geithner comes back and his meeting is over and the "new york times" cannot speak for the
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chinese government. at least not yet. now, hugh comes to washington, right, he will be negotiating over iran and nuclear arms and all the rest of it. what if nothing happens on the currency over the course of the next couple weeks? >> well, it's really important, i think, for the chinese cultural to save face. we're not going to force them and if they make a cosmetic, modest change, that will be enough. to answer your question, larry, if they don't. then i think the uproar from capitol hill will become deafening. >> that's where i'm going on this. that's what i think. i think that's the stock market jitters. part of it. i think the world economy and the stock market benefit from the absence of the u.s./china trade war. that's who i think really benefits. >> we just need a little carrot, we don't need a lot. the fire on capitol hill -- >> we have already gotten indications on that. through steve's reporting yesterday. we got a little bit on them. >> this 3% revaluation has been in the market since about june
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of last year. >> right. >> so, the market has been ahead of the political development and it's china who is late and the united states is late on making this happen. >> all right, we'll leave it. the politician business hind the market. thank you very much. when we come back, part two of our debate on airline bag fees. our smack down -- >> you guys are completely whacked out. you're whacked out on this subject! i have never seen anything like it. >> a top executive from southwest airlines will weigh in with his perspective and i wondwond wonder what larry's perspective? >> you guys are obsessing and some certain senior producers in the control room are obsessing. >> our senior producer rich fisherman is going crazy over this one. he can't live in a world where they charge you for baggage. my goodness. all right, we'll be right back. should be famous. l we're working on it. so you're seriously proposing we change our name
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to sun life valley? do we still get to go skiing? (announcer) sooner or later, you'll know our name. sun life financial. imagine being at thirty thousand feet with a plane full of kids.
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saving the fishermen money, and their catch. this is how cargill works with customers. so, at national, i go right past the counter... and you get to choose any car in the aisle. choose any car? you cannot be serious! okay. seriously, you choose. go national. go like a pro. the country's biggest truck company citing new military contracts and a recovery in demand for heavy duty trucks in north america. right now take a look at where the company is trading. it's up 1.7% there. mu lis snau. the debate over charging for
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baggage took a new turn earlier this week when spirit airlines said it would begin charging for ai carry-on luggage. ben baldanza supported his company yesterday. >> spirit is reacting by lowering fares and lowering checked bag fees and making the boarding process quicker and we lowered fares by more than the amount of the bag fee. everyone wins. >> it was a good argument, a lot of viewers agreed with him. one airline has agreed to not charge for any bags and that is southwest airlines. joining us from southwest airlines, kevin, thank you for coming on. the ceo of spirit also said that sales are up 50% since they started this program. trying to prove the point that this is what people want. a lower fare and then maybe they pay for the bags or maybe they leave them at home and wear the same underwear the whole entire
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time, i'm not really sure. has your experience been the opposite, though? you have taken the opposite business model, how has it worked out for you? >> good morning. thank you for having us ton today to talk with you about this. we know that people love low fares and that's southwest airlines is built on and also being part of the travel experience is bring things with you and we don't think that it's right to charge people to bring along things for their trip. so, we definitely have a different perspective on the baggage piece. but we definitely know that low fares are very important to customers and that's what we do every day, plus we give you the free bags. >> kevin, a lot of airlines tend to follow each other. when one says we're going to charge for food, the other says, why don't i do that, too? is there a chance that you might follow this trend? >> we've said no and, matter of fact, we're spending a lot of money telling people that we don't charge, we don't nickel and dime you for things and right now we're spending a lot of effort telling people that when you buy ticket on southwest
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airlines you're welcome to bring along two bags checked for free and we think that's part of the experience that you're paying for and, so, we're absolutely committed to not doing that and we think it's really important to our customers. matter of fact, we're winning new customers from the carriers who have followed each other down this path. new customers are coming to southwest airlines because they're saying they're voting with their pocketbook that it's important to be able to take their bags with them for free. >> so my question becomes, how do you make any money? i went online right before this segment and priced a flight randomly from laguardia to tampa on both you and spirit and you actually came in about 50 bucks round trip. >> that's good for you, kevin. that was quite fortuitous. >> but it was cheaper and you're not charging for bags. how are you making any money? >> well, i'm glad to hear that you checked out for that and that you saw that. it doesn't surprise me that you saw our fare was actually lower. certainly when you factor in bag
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fees we're almost always lower. doesn't surprise me one bit but the answer to your question is we have very productive and fantastic workforce that allows us to operate very efficiently. this airline is built with all sorts of efficiency built in to it so we can operate with great low fares like that and make a profit. and as you know from our track record, profitability is something that has been synonymous with southwest airlines name. >> are you not union and not paying your people anything? how do you have your costs so low that you can make money $220 from new york to tampa. >> our wage rates are at the top, if not the top of the industry. so the secret really is the efficiency and the propductivit of our people. they work very hard to make a great experience come enables us to have that lower operating cost. >> it sounds like some of the other guys could learn from you then. just real quick, we do have to
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go. your thoughts on this potential merger between united and usairways. >> too early to tell right now. we're watching it like everybody else is and we're going to keep our eye on it. >> thank you so much, kevin. >> okay, you have a great day. >> larry? >> all right, are you guys satisfied? are you happy now? who's the winner? who's the winner, real quick. >> i like the idea of consumer choice. i'll throw that out there. i like the idea of the choice. if i'm not going to bring anything and it's a day trip -- >> you're going to wear the same underwear the entire time. >> maybe i'll buy some when i get there. >> we'll wait for the e-mails to come in. "power lunch" coming up at the top of the hour. michelle, what's on your plate. >> we have a lot, larry. a special guest from the world of retail. mickey drexler joins us live and gives us his unique take on the state of the consumer. by the way, j. crew's stock more than tripled in the past year.
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there's a study that says 47% of households will not pay federal taxes at all for 2009. however, the top 10% of earners will pay 73% of the total bill. does the tax system punish success? that is our power grid debate. apple is said to break some new news. we'll be all over that as soon as it happens. back to you guys. when xwhee back, companies spending big money to beef up personal security for their ceos. why in name names dig through the numbers. we'll be right back.
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welcome back to "the call" with your daily realty check i'm diana olick in washington. home prices fell quarter to quarter nationally for the first time in nine months down nearly 4%, that according to clear capital while prices are still up 5% from lows a year ago, the number of foreclosed properties hitting the market is rising and putting pressure on prices again. the average rate on the 30-year fix rose to 5.2% this week. that according to freddie mac. blame it higher bond yields say their chief economist after a positive march employment report. the manhattan rental market may be stabilizing.
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still down 6% from a year ago but flat quarter to quarter. a pick up in the number of new rentals and a 31% drop in inventories. check back with the realty check at 2:50 and until then go to the blog. larry? >> thanks very much. it used to be that you'd see ceos in foreign countries spending a lot of money on personal security, but now, more and more u.s. executives are following suit at home. bertha cc ooombs has the story. >> according to equalar and some health care firms this proxy season are reporting higher costs in 2009. in its proxy statement file would the sec wellpoint said it was advised to spend $150,000 on extra personal security for ceo angela brawley last year "in light of growing concerns as a result of the health care debate."
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the company provided her with additional protection including security enhanced vehicle and in-home security. compensation consultants called the detail of the disclosure unusual. >> i think they wanted to make it clear to their shareholders that, you know, this was being done in response to a real concern and not something that they arbitrarily decided to provide as an additional benefit. >> in fact, this morning a wellpoint spokesman told me it just wasn't ms. brouly several executives received threatening e-mails, phone calls and even a home visit. certainly drug manufacturers have also been targeted in the summer of 2009, the chairman of novartis saw his vacation home in europe burned. arsonists are suspected and those arsonists are suspected to have been animal rights activists who also desecrated his family's funeral plot. in its proxy statement this year
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abbot lab says it increased personal spending for its ceo 40% to more than $300,000 while mylan paid for its to use the jet for security concerns. >> the cost of dealing with a sudden situation with your ceo where they're injured or worse is far more expensive. >> firms are required to report any personal benefit in excess of $10,000 in proxy statements, but reported costs very widely. coming up on "power lunch" we'll look at security proxy disclosures for wall street executives and for more on this story, go to >> where is this coming from, bertha? is this because washington is demonizing businesses and demonizing health care insurers. is that what it is all about demonizing banks as jamie dimon says? >> it seems to be focused more on wellpoint if you look at the
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proxy disclosures for cigma and humana, they don't have any types of disclosures like that. >> all right. >> just doesn't mean they're not demonized. they have to protect themselves. a quick break and then "last call." i was active, eating healthy. i thought i was in great shape. so i was surprised when my doctor told me i still had high cholesterol. that really hit me, and got me thinking about my health. i knew i had to get my cholesterol under control.
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